House panel approves budget with hopes for tax reform

By ANDREW TAYLOR -

7/19/17 10:52 PM

WASHINGTON — A key House panel on Wednesday approved a Republican fiscal plan that probably won’t deliver on its promises to balance the budget, but would begin to clear a path for a GOP effort to overhaul the tax code this fall.

The Budget Committee approved the measure by a party-line 22-14 vote. The plan proposes deep cuts to safety net programs like Medicaid and food stamps and reprises a controversial Medicare plan strongly opposed by President Donald Trump — though Republicans only want to deliver on a small fraction of the cuts.

Instead, to most Republicans on Capitol Hill, the most important element of the plan is the procedural pathway it would clear to allow Republicans to pass their top priority — an overhaul of the tax code — later this year without fear of a blockade by Senate Democrats. Passing a budget through Congress is the only way to get a GOP-only tax plan enacted this year.

Republicans argue that growing deficits and debt are part of the reason for slow economic growth and that big benefit plans like Medicare and Medicaid need changes now to keep them from going broke for future generations.

“Both parties in Washington have failed to abide by a simple principle that all American families and small businesses do — that we must live within our means,” said Budget Chairman Diane Black, R-Tenn. “Balancing the budget requires us to make tough choices, but the consequences of inaction far outweigh any political risks we may face.”

But like the GOP’s health care repeal-and-replace efforts and its moribund hopes to boost infrastructure, the GOP budget outline faces opposition from both wings of the party. Republican conservatives want more of its proposed cuts to actually take effect in follow-up legislation, while moderates want to focus on tax reform instead of cuts to food stamps or federal employee pensions.

GOP leaders generally fear that adding spending cuts to tax reform would only make the tax code rewrite more difficult to pass.

The nonbinding GOP plan promises to cut more than $5 trillion from the budget over the coming decade, though Republicans only appear serious about enacting a relatively modest 10-year, $203 billion deficit cut over the same period through filibuster-proof follow-up legislation. Conservatives are pressing for larger cuts, including strict work requirements for food stamps, for instance.

But Democrats blasted the sweeping cuts in the plan. It revives a provocative proposal to turn Medicare into a voucher-like program for future retirees. Experts say that change would likely increase costs for beneficiaries and deny them the coverage guarantees of Medicare.

“The list of upside-down priorities and irresponsible policies in this document is lengthy,” said top panel Democrat John Yarmuth of Kentucky. “Democrats support investments in education, health care, national security, job training, innovation and infrastructure. We support programs that help individuals with nowhere left to turn, and a tax code that helps families get ahead.”

The panel is stocked with hard-core conservatives, some of whom said the measure is too loose on spending. Rep. Glenn Grothman, R-Wis., faulted it for a $28 billion increase above Trump’s budget for defense and for rejecting most of Trump’s proposed $54 billion cut to domestic programs for next year. Rep. Mark Sanford, R-S.C., was denied a chance to offer a late amendment designed to block a so-call border adjustment tax and voted for the plan anyway — but wouldn’t guarantee he’ll support it in a floor vote.

While exempting Social Security, veterans and defense, the plan proposes cuts across the rest of the budget to turn this year’s projected $700 billion-or-so deficit into a tiny $9 billion surplus by 2027. It would do so by slashing $5.4 trillion over the coming decade, including almost $500 billion from Medicare and $1.5 trillion from Medicaid and the Obama-era health law.

The GOP plan also proposes a 10-year, $150 billion cut to food stamps, though the Agriculture Committee would be directed to come up with no more than $10 billion.

It also contains its share of gimmicks, including $1.8 trillion in deficit cuts over the coming decade from rosy projections of economic growth averaging 2.6 percent over 10 years. Another $700 billion in savings would come from a crackdown on “improper payments” such as tax credits and Social Security and Medicare benefits going to people who don’t qualify for them. Many of its cuts are unspecified.

But in the immediate future, the GOP measure is a budget buster. It would add almost $30 billion to Trump’s $668 billion request for national defense next year and rejects most of Trump’s proposed cuts to domestic agencies — only to promise deeper, nonbinding cuts in the future.

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